Bloomberg News

CEZ Drops to 8-Year Low as Spy Row Threatens Necas: Prague Mover

June 14, 2013

CEZ AS fell to an eight-year low as a spy scandal threatens the government of Prime Minister Petr Necas, stoking concern the Czech Republic’s biggest utility will be levied with new taxes if the opposition comes to power.

The shares lost 1.7 percent to 515 koruna by the close in Prague, falling for an eighth day to the lowest since July 2005, according to data compiled by Bloomberg. Turnover was 288 percent of the daily average from the last three months. The PX index (PX) closed 0.1 percent lower.

Necas has refused to quit after police charged officials including his head of office and military intelligence chief with organizing an illegal surveillance operation. The opposition Social Democrats, emboldened by an opinion-poll lead a year before elections are normally due, called a June 18 no-confidence vote. The party has said it seeks to impose special taxes on energy, finance and telecommunications companies.

“The recent government scandal is a major risk for CEZ as it could force the prime minister out and new elections would be coming,” John Milton, a Budapest-based director at Ipopema Securities SA, said in e-mailed comments. “The opposition said it will levy big taxes on the energy sector.”

Telefonica Czech Republic AS, the country’s biggest phone company, slumped 2.8 percent, the most since April 9, to 290 koruna. CEZ shares have tumbled 24 percent this year, trailing an 11 percent decrease for the PX Index.

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net


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